Saying it right on the economy and gas prices

Sometimes a president can get it wrong, as President George W. Bush did when he said “stay the course” back in 2006 regarding Iraq. Sometimes he can get it right, as President Bush did a month ago when he said, “We’re not in a recession, we’re in a slowdown.”

“We’re in the midst of the most widely predicted and heralded recession in history. Problem is, so far it’s a non-recession recession. Score one for President Bush. In an election year, it could be a big one.”

The news this past week that the first-quarter GDP growth rate came in at 0.6 percent was good good good news for this Administration. The media cheering for a good year for Democrats combined with negative growth in that first quarter could’ve easily had a huge negative psychological impact. The second-quarter would’ve been set up to make the recession official.

The media would’ve loved it. Democrats would’ve been as happy as any time since Bill Clinton’s victory in 1992. And John McCain would have found himself in the second worst spot of his life.

Kudlow writes:

“The bad news bears always focus on areas of economic weakness. But parts of the economy are doing splendidly. This includes agriculture, energy, export firms operating in the global boom, and all manner of private-sector business, professional, health, and education services. Incidentally, these are the exact sectors producing the highest-paying jobs. What’s more, at 154 million employed, the civilian labor force just hit a new all-time high.

Another significant data point: Corporate profits are outperforming all expectations. With three quarters of the S&P 500 companies reporting, profits outside the banking system have increased 10 percent over a year ago.”

Also on the economy, the Wall Street Journal today continued their ongoing Econ 101 class today in a piece called “Windfall Profits for Dummies.” Speaking of Barack Obama and Hillary Clinton’s support of a 1970s-style windfall profits tax, the Journal explains the problem:

“You may also be wondering how a higher tax on energy will lower gas prices. Normally, when you tax something, you get less of it, but Mr. Obama seems to think he can repeal the laws of economics. We tried this windfall profits scheme in 1980. It backfired. The Congressional Research Service found in a 1990 analysis that the tax reduced domestic oil production by 3% to 6% and increased oil imports from OPEC by 8% to 16%. Mr. Obama nonetheless pledges to lessen our dependence on foreign oil, which he says ‘costs America $800 million a day.’ Someone should tell him that oil imports would soar if his tax plan becomes law. The biggest beneficiaries would be OPEC oil ministers.”

That paragraph and the one below encapsulate nicely what we need to be hearing from Republican leaders from coast to coast. If they ever expect the public to support the right direction, that can’t just leave the teaching to members of the press.

“This tiff over gas and oil taxes only highlights the intellectual policy confusion – or perhaps we should say cynicism – of our politicians. They want lower prices but don’t want more production to increase supply. They want oil “independence” but they’ve declared off limits most of the big sources of domestic oil that could replace foreign imports. They want Americans to use less oil to reduce greenhouse gases but they protest higher oil prices that reduce demand. They want more oil company investment but they want to confiscate the profits from that investment. And these folks want to be President?”

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“If Congress can do whatever in their discretion can be done by money, and will promote the General Welfare, the Government is no longer a limited one, possessing enumerated powers, but an indefinite one, subject to particular exceptions.” —James Madison (1792)